501(c)(3) vs 501(c)(4), and Where 501(c)(6) Fits

A 501(c)(3) charity and a 501(c)(4) social welfare organization are both tax-exempt nonprofits, and both can work for the public good. The difference is a trade: a 501(c)(3) can receive tax-deductible donations and most grants but is strictly limited in lobbying and banned from election campaigns; a 501(c)(4) can lobby without limit and take some part in elections, but gifts to it are generally not deductible. This page sets the two side by side, adds the 501(c)(6) business league that is often confused with both, and explains when organizations use more than one.

501(c)(3), 501(c)(4) and 501(c)(6) compared

Counts are from the IRS Exempt Organizations Business Master File. Rules are from the tax code and the IRS pages linked below, read on 18 October 2026.

What a 501(c)(4) is

Section 501(c)(4) of the tax code covers civic leagues and organizations operated exclusively for the promotion of social welfare, with no private inurement. The IRS’s social welfare page says such an organization must operate primarily to further the common good and general welfare of the people of the community. Neighbourhood and homeowners’ associations, advocacy groups and some community organizations use this status. The broader map of exempt types is in types of nonprofits.

Deductibility, the difference donors care about

Gifts to a 501(c)(3) are deductible as charitable contributions. Contributions to a 501(c)(4) generally are not, although a business may sometimes deduct a payment as an ordinary and necessary business expense. That one difference shapes everything else: individual donors, most private foundations and most corporate giving programmes give to 501(c)(3)s. A 501(c)(4) raises money from members, from donors who care more about the cause than the deduction, and from other 501(c)(4)s.

Gifts to a 501(c)(4), 501(c)(5) or 501(c)(6) are, however, exempt from federal gift tax under section 2501(a)(6), which matters for large donors who give more than the annual exclusion.

Lobbying and elections

A 501(c)(3) may lobby only if it is not a substantial part of its activities, or, if it elects under section 501(h), within spending limits that start at 20% of the first $500,000 of exempt-purpose spending and are capped at $1 million, with a 25% tax on any excess, according to the IRS’s expenditure test page. It is absolutely prohibited from taking part in any campaign for or against a candidate, on pain of losing its exemption.

A 501(c)(4) may lobby without limit for legislation germane to its programmes. It may also take part in candidate campaigns, so long as that is not its primary activity, although that spending may be taxed under section 527(f). How much lobbying charities actually do, by size, and how close they come to the limits, is in can a nonprofit lobby.

Getting the status

• 501(c)(3). Apply on Form 1023 or 1023-EZ, through Pay.gov, and receive a determination letter. See how to get 501(c)(3) status.
• 501(c)(4). Notify the IRS on Form 8976 within 60 days of formation, online, with a $50 fee. Missing it costs $20 a day, up to $5,000. A determination letter on Form 1024-A is optional and does not replace the notice.
• 501(c)(6). Recognition on Form 1024 is optional, though many business leagues apply for the certainty.

All three file the Form 990 series each year; see which Form 990 to file.

Donor disclosure

Every organization filing Schedule B lists its major contributors, but only some report the names. According to the Schedule B instructions, 501(c)(3)s must report contributors’ names and addresses; other exempt organizations, including 501(c)(4)s and (6)s, enter “N/A” for names and addresses but must keep them in their books and records. Schedule B is not made public for most organizations in either case. That difference is part of why 501(c)(4)s are associated with political spending.

Membership dues and the lobbying notice

Members of a 501(c)(4), (5) or (6) who pay dues as a business expense cannot deduct the part of their dues that the organization spends on lobbying and political activity, under section 162(e). The organization must tell members what share that is each year, or pay a proxy tax on its lobbying and political spending instead. A trade association that lobbies, and most do, needs this in its annual dues notice. Membership software that handles dues is compared in membership management software.

How many there are

The IRS file lists 68,449 501(c)(4) organizations, against 1,642,105 501(c)(3)s, and 57,755 501(c)(6)s. 69.2% of the 501(c)(4)s file only the Form 990-N, which means their gross receipts are normally $50,000 or less: most are small local associations, not national advocacy groups. New ones are rare by comparison: the file holds 1,843 501(c)(4) rulings or notices dated 2025, against 113,200 for 501(c)(3)s. These are organizations still on file, so earlier years are understated by those that have since closed.

Annual filing and reporting differences

Both kinds of organization file the same Form 990 series, with the same thresholds: the 990-N for small organizations, then the 990-EZ or the full 990. The differences are in the schedules. A 501(c)(3) reports its lobbying on Schedule C Part II, and public charities show their public support on Schedule A. A 501(c)(4), (5) or (6) reports political campaign spending on Schedule C Part I and, if it has members, its lobbying notices and any proxy tax on Part III. Proxy tax is paid on Form 990-T, and tax on political spending under section 527(f) on Form 1120-POL. Both kinds of organization must make their three most recent annual returns and their exemption application available for public inspection. Which return you file, and when, is in which Form 990 to file and Form 990.

Paired organizations: a 501(c)(3) and a 501(c)(4) together

Many advocacy organizations run both: a 501(c)(3) for education, research and services, funded by deductible gifts and grants, and an affiliated 501(c)(4) for lobbying and political work, funded by non-deductible money. The two must be genuinely separate:

• separate boards, though they may overlap, and separate bank accounts and books;
• shared staff, space and costs allocated and charged at fair value, under a written agreement;
• no deductible money from the 501(c)(3) paying for the 501(c)(4)’s lobbying or political work;
• each reported as a related organization on the other’s Form 990.

Related-entity structures more generally are covered in can a nonprofit own an LLC and can a nonprofit own a for-profit.

Common misconceptions

• “A 501(c)(3) cannot lobby at all.” It can, within limits, and the 501(h) election makes the limits clear and generous for most charities.
• “A 501(c)(3) cannot talk about policy or elections.” It can educate on issues and run non-partisan voter registration and candidate forums; what it cannot do is support or oppose a candidate.
• “A 501(c)(4) is a political organization.” Political campaign activity cannot be its primary activity, and most 501(c)(4)s are small local associations.
• “501(c)(4)s pay no tax on political spending.” Political spending can be taxed under section 527(f).
• “A 501(c)(4) does not need to tell the IRS it exists.” It must file Form 8976 within 60 days of forming.
• “A 501(c)(4) is easier to start.” The paperwork is lighter, but raising money without deductibility is usually harder.

Starting a 501(c)(4), step by step

1. Form a nonprofit corporation in your state, with articles that state a social welfare purpose. The state steps are the same as for a charity; see how to start a nonprofit.
2. Get an EIN.
3. File Form 8976 online within 60 days, with the $50 fee.
4. Decide whether you want a determination letter on Form 1024-A, which some banks, funders and states ask for.
5. Register with your state for charitable solicitation if your state requires it of 501(c)(4)s, and for any state tax exemption, which often has its own application.
6. Set up the dues notice if you have members and will lobby, and track political spending separately from the start.
7. File the right Form 990 each year; most file the 990-N.

Which should you be?

• Choose 501(c)(3) if you will rely on individual donations, foundation grants or corporate giving, and your work is services, education or research with some advocacy. Most new nonprofits are 501(c)(3)s, and most grant and technology programmes, including Canva and Google Workspace, are open only to them. See nonprofit grants.
• Choose 501(c)(4) if changing law or electing candidates is central to what you do, your supporters will give without a deduction, or you are a community association funded by members.
• Choose 501(c)(6) if you are an association of businesses or professionals promoting a common business interest.
• Consider both if you need deductible funding for most of your work and freedom to lobby for the rest.

Changing later is slow and difficult, because assets given for charitable purposes must stay in charitable use. Get the choice right at the start; see how to start a nonprofit and charity vs foundation vs nonprofit.

Where the figures come from

Organization counts and ruling years are our analysis of the IRS Exempt Organizations Business Master File (subsection codes, the 990-N filing requirement and the RULING field). Script: bin/analyse_bmf_animal_c4.py. Rules were read in sections 162, 501 and 2501 of the Internal Revenue Code and on the IRS pages linked above, on 18 October 2026. This page is general information, not legal or tax advice.

This is reference information, not legal or tax advice. Rules vary by state and change over time. For a decision that carries real consequences, check the current text at irs.gov or your state registry, and talk to a nonprofit attorney or CPA.